"Live Free Or Move" is, of course, a takeoff on the New Hampshire slogan, "Live Free or Die". We want to live free, natch, but wouldn't it be nice to have an alternative to freedom other than death?
So let's live free. Unless we find we can't. In which case, we should move to where we think we can live free.
Meantime, let's discuss freedom. Political and economic (but I repeat myself).

Monday, March 06, 2006

The Path To Peace, Revisited

In sum, government extracts the resources it needs to wage war in four ways: it taxes, it prints, it borrows, and it steals--it forces individuals to provide services under terms that the individuals in question do not agree to freely. If we truly are for peace and not for war, we will work to end the income tax, end the ability of government to print money, end the ability of government to borrow, and end the ability of government to force individuals into servitude of any kind.

Now we come to the reason this system is able to perpetuate itself. And there is something of a mystery to explain here. No people anywhere will put up with a leviathan that grows and grows forever. At some point, the problem of funding state expansion will result in too much violence against property, and the people will revolt. Indeed, if the federal government had to collect all its revenue through a tax of any kind, leveled right now against the public, I submit to you that it would spark a tax revolt on a scale never before seen in modern history.

Thus do we have the central bank to create money for the state. Thus do we have paper money that can be created in unlimited quantities. Thus do we have deposit insurance to make banks failure proof, so that the masses will never doubt that the credit pyramid is immortal. Thus do we have the fed's power to manipulate interest rates and control the flow of credit to the system.

An economist at Lehman Brothers sent us an interesting chart the other day. It compares the level of price increases across many Fed regimes. Under the first Fed governor Charles Hamlin, the dollar declined 8% in value. Under Thomas B. McCabe from the late forties, it declined 7.2%. Under Arthur Burns, wholly owned by Nixon, the dollar declined 42% in value. Under Volcker, Mr. Tight Money, it fell 40%. And under Greenspan, who has a reputation as a great inflation fighter, the value of the dollar in terms of goods and services fell fully 44%!

Inflation serves the cause of the state by giving it room to run up debts without limit and fund its activities without making the people cough up more revenue. Indeed, that is the primary purpose of the inflationary state. People often say to me that a gold standard is impractical. In fact, that is not the case. It is very practical. It is the free market answer. The state doesn't need to produce money any more than it needs to produce shoes or shirts or clocks. The problem is that we lack the political will to stop the inflation monster.

How many Americans understand how the ability to print money supports the government's ability to wage war? How many in the peace movement understand that, if you want peace, you must work against central banking?